How much money can you really make working for MLM Herbalife?
Thinking about joining MLM Herbalife? We investigate how much money their distributors are really making, and why the ‘opportunity’ doesn’t seem to work for most.
Our recent investigations into MLM companies (aka, direct selling, social selling, network marketing etc) was inspired by the film Betting on Zero. The film focuses on one MLM – Herbalife. So we thought we’d have a look at how much people are really earning from Herbalife, looking at their own publicly available information.
Here’s what we learned.
How does Herbalife work?
As Herbalife themselves say, as a distributor of Herbalife you can participate in three ways:
- You can buy products at a discount for your own or household use.
- You can sell products to make a retail profit.
- You can recruit others who want to consume or sell the products.
They add that:
“…nearly 86% of U.S. Distributorship (399,673) did not receive any earnings from Herbalife.”
Herbalife assume that these people joined “…simply to receive a discount on Herbalife® products.” However, this assumption contrasts with the USA’s Federal Trade Commission’s (FTC) settlement with Herbalife which meant that Herbalife had to “pay $200 million to people who lost money trying to run an Herbalife business”. According to the FTC this includes at least around 350,000 people.
Also, Herbalife products are allegedly overpriced:
“Herbalife’s retail pricing of its multi-vitamin is more than three times the price of comparable brand name products on the market.”
Given this, and expert reviews of their products (like this one) we, like the FTC, don’t believe that that 86% of their distributors only signed up for personal or household use.
How much money can you really make with MLM Herbalife?
In order to get an idea of what you can expect to earn with MLM Herbalife, we’re looking at the earnings of distributors in the US as an example.
So what are people earning? According to Herbalife, of those who received earnings from Herbalife, approximately:
- 50% made less than US$370 a year.
- 10% made just US$6,965 a year.
- And only the top 1% made more than US$108,802.
And remember, according to Herbalife, less than 15% of their distributors in the US earned any money from them. By our maths, Herbalife had 464,736 distributors (if 399,673 is 86% of them). Given the figures above, of this number:
- 399,673 made nothing.
- 34,855 made less than US$370 a year (approximately £281).
- 6,971 made more than US$6,965 a year (approximately £5,303).
- 697 made more than US$108,802 a year (approximately £82,846).
It’s also important to note that these are only earnings. They don’t take into account any expenses their distributors incurred, including their initial investment.
How much did US Herbalife distributors earn in 2015?
This calculation seems to tally with another income disclosure from Herbalife for the US in 2015:
Here Herbalife agrees that most distributors join for business opportunities, saying that only “40,204 of the 437,152 single-level Members are Sales Leaders without a downline.” So of all their ‘single-level Members’, over 90% have a downline (i.e. have recruited distributors under them).
Of the distributors in this table, we can see that on average:
- 10.6% earned nothing.
- 62% earned $303.
- 16.9% earned $2,200.
- 3.9% earned $7,130.
- 3% earned $15,445.
(The federal minimum wage in the US is $15,080.)
As with all MLMs we have looked at to date, you need to get into the top tiny percentage of the company before you earn anything approaching a ‘liveable’ wage. In this case, only the top 1.7%+ earned over an average of $35,410 – and that’s before expenses.
In fact, according to this video, “88% of Herbalife distributors make no commissions” and “1% of the Herbalife distributors get 87% of the commissions that are paid.”
How much does it cost to be a Herbalife distributor?
Remember, as with all income disclosure statements we’ve seen so far:
“These amounts are before expenses incurred in the operation or promotion of their business.”
So these sums aren’t profit. They’re what you earn before expenses. And what expenses might you incur? To start with, to join as a distributor your initial investment is:
“You have no required purchases other than the initial Distributorship kit also known as the International Business Pack (approximately (USD) 94).”
Then Herbalife says your expenses could be:
“…advertising or promotional expenses, product samples, training, rent, travel, telephone and Internet costs, and miscellaneous expenses.”
Notice product samples are listed. In order for people to fully buy into what you’re selling they’ll usually want to see, touch or experience it. So you need samples – from Herbalife. This means that the earnings in the table don’t even include the money you have paid Herbalife to buy samples to make sales!
“…the distributor is responsible for growing his or her business and personally pays for the sales activities related to attracting new customers and recruiting distributors by hosting events such as Herbalife Opportunity Meetings or Success Training Seminars; by advertising Herbalife’s products; by purchasing and using promotional materials such as t-shirts, buttons and caps; by utilizing and paying for direct mail and print material such as brochures, flyers, catalogs, business cards, posters and banners and telephone book listings; by purchasing inventory for sale or use as samples; and by training, mentoring and following up (in person or via the phone or internet) with customers and recruits on how to use Herbalife products and/or pursue the Herbalife business opportunity.”
As you can see, similar to most MLMs, you are responsible for investing time and money in ‘growing’ your business – an effort and investment that doesn’t appear to pay off when you look at the tiny earnings and high turnover rate of most distributors.
Indeed, as one former distributor says of his ‘profit’, “It cost me $5,000 to get that $1,000.”
Why as many as 90% of distributors leave Herbalife each year
This is probably why in 2005, Herbalife admitted that it had a turnover rate of 90% of distributors who were not supervisors, and 60% of supervisors. The company goes on to say that:
“We estimate that, of our over one million independent distributors, we had approximately 201,000 supervisors after requalifications in February 2005.”
Indeed, it’s estimated that 1 distributor drops out of Herbalife every 16.7 seconds. With their high loss of distributors, Herbalife needs to recruit heavily each year to replace them. They admit that:
“There is a high rate of turnover among our distributors, a characteristic of the network marketing business. The loss of a significant number of distributors for any reason could negatively impact sales of our products and could impair our ability to attract new distributors.”
We have to wonder why, if Herbalife know that such a high proportion of distributors leave each year, rather than aggressively recruiting new people into a clearly unworkable business model for most, they don’t rework the entire model?
Perhaps because the model works very well for the rich few at the top? And they don’t care about the 90% of non-supervisor distributors who leave each year because it doesn’t work for them?
Why Herbalife was fined $200 million by the FTC
And it’s not just in the US that we see this pattern. This 2016 income disclosure statement for the UK shows that 5.3% of Herbalife distributors in the table earned £0 and 70.9% earned just £296 over the year.
This 2016 income disclosure statement for the Philippines, meanwhile, shows that 14% of Herbalife distributors in the table also earned nothing.
Time and again, we see that the networking marketing model doesn’t work for most people who join. Read why Herbalife was forced to pay $200 million to compensate consumers who had lost money by the FTC. The FTC claim that Herbalife:
“…deceived consumers into believing they could earn substantial money selling diet, nutritional supplement, and personal care products.”
Only the people at top of the pyramid profit from MLMs
As you can see this follows a similar pattern to the income disclosure statements we have examined by Stella&Dot and Arbonne, and agrees with the extensive research conducted into MLMs.
The pattern always appears to be that only the people at the top of the pyramid (because when you look at incomes, that’s the shape these businesses take) earn good money. The people in the middle and at the bottom earn either pocket money or nothing at all. And many appear to actually lose money.
How much can you expect to earn from other MLMs?
As well as this investigation into how much you can expect to earn as a distributor for MLM Herbalife, we have explored:
- How much money can you really make working for MLM Stella&Dot?
- How much money can you really make working for MLM Arbonne?
If you’re considering joining any MLM scheme, we recommend reading this article first:
And finally, if you’d like to hear personal stories from Herbalife distributors (and how the business model doesn’t work for most people), we recommend watching the film Betting on Zero.
Please note: This is our analysis of information made publicly available by Herbalife. If we have incorrectly interpreted this information, or you work for Herbalife and have factual income disclosure statements that contradict our findings here we would welcome seeing them, and will happily edit this article to reflect. Please note, we do not accept personal experiences from representatives as ‘factual income disclosure statements’.